Econ Unit 1 Test

A price floor is a price control that holds prices _____ the equilibrium price, and results in _______.

Above, surplus

The law of supply states that:

As price increases, quantity decreases.

The Law of Supply states that:

As price increases, quantity increases.

The Law of Demand states that:

As price of a good or service increases, the quantity demanded of that good or service decreases.

What does the law of demand state?

As the price of a good or service increases, the quantity of that good or service demanded decreases.

A price ceiling is a price control that holds prices _____ the equilibrium price, and results in _______.

Below, shortage

What type of relationship is there between price and quantity?

Inverse

At the equilibrium price,

The quantity of a good sellers are willing to sell is greater than the quantity buyers are willing to buy.

The supply curve usually:

The supply curve usually:

Sugar is an input used to produce candy bars. If the price of sugar increases:

The supply of candy bars will decrease.

The supply curve slopes upward because:

There is a direct relationship between price and quantity supplied.

What are the two components of demand?

Willingness to purchase and ability to pay

If suddenly the price of a complementary good, such as peanut butter, doubled, what might happen to the demand curve for chocolate?

The curve would shift to the left.

A new technology that reduces the cost of producing shoes would:

Cause the supply curve for shoes to shift to the right.

The demand curve slopes ________, the supply curve slopes _________, and point where they intersect is called _________.

Downward, upward, equilibrium

The demand curve usually:

Slopes downward.

An increase in the number of consumers in the market for chocolate would:

cause the demand curve to shift to the right.

Rent control is an example of a _____.

price ceiling

The minimum wage is an example of a ______.

price floor